Using Life Insurance to Fund Assisted Living

Share this content

Assisted living is a compelling option for seniors who can no longer handle every aspect of independent living but who don’t need the heightened nursing and medical attention that a nursing home offers. Moving into assisted living provides respite from home maintenance, assistance with self-care, and a vibrant, social environment that improves mental and physical health.

However, the cost of assisted living, which depends on where a person lives and the level of care he or she needs, can be a burden financially for families who haven’t prepared for it or who mistakenly assume that Medicare covers it.

We all know that we’ll need care at some point, but too many of us fail to plan for it. As of 2012, Less than 3 percent of people had long-term care insurance. However, 62 percent of people have life insurance. Every situation is different, but for many people, it makes sense to essentially sell their life insurance policy to a third party and use the proceeds to pay for long-term care.

How does it work?

A paid-up, in-force life insurance policy has value. There are companies, “life-settlement providers,” that will purchase peoples’ life insurance policies from them. The company agrees at the time of the sale to pay a percentage of the policy’s face value over the course of several months. The total amount paid will be less than the policy’s death benefit, but, if it is a whole life policy, it will be greater than its surrender value.

As the new owner of the policy, the purchasing company takes over payment of the policy’s monthly premium. Also, as the owner, the company will collect the full amount of the death benefit when the original policyholder dies, minus, in some instances, a small allotment for funeral expenses that goes to the original policyholder’s beneficiary.

This process is known as a “conversion.” It converts a life insurance benefit into a long-term care benefit. Such a conversion can be a useful way for someone to unlock immediate cash from a deferred asset, especially in instances when the policy premiums have become burdensome and the policyholder is considering surrendering the policy or canceling it.

Any life insurance policy — whole, term, universal, etc. — is eligible for a life settlement conversion.

What a life settlement isn’t

There are actually several ways to take cash from a life insurance policy to pay for long-term care or medical costs, in addition to life-settlements: viatical settlements and accelerated death benefits.

Viatical settlements are similar in many respects to life settlements, and many people use the terms interchangeably. Both transactions involve selling an insurance policy to a third party that agrees to pay the premiums and collect the death benefit in exchange for an early, partial payout. The difference, however, is that a viatical settlement requires that the seller have a chronic illness or be terminally ill with less than two years to live.

Accelerated death benefits have a similar requirement to viaticals. An accelerated death benefit is a provision, written into some life insurance policies, that lets policyholders who have been diagnosed with a terminal illness begin collecting on the face value of the policy while still alive.

Life settlements do not require any terminal illness diagnosis. However, it does require the need for a long-term care provider because the payments from the life settlement conversion must be paid to a long-term care provider; they can’t be made to the original policyholder.

Advice before buying

As with any financial decision, it’s important to shop around and get more than one quote before selling your life insurance policy. Settlement offers can vary widely. There are also life settlement brokers that work on commission and can shop among many life settlement providers to find the best price.

It’s also important to remember that the payments from the conversion are for a fixed period of time. They are not a permanent solution to a person’s financial needs. But especially in instances where people need money for long-term care for a bridge period — perhaps after someone moves out of their home but he or she call sell the home — a life settlement conversion can be a very useful tool.

 

Did You Enjoy The Article? Get More Like This.

Receive relevant information, touching resident stories and helpful tips directly to your email inbox. All you need to do is subscribe to our VIP newsletter "Family Ties". It's FREE and you can unsubscribe anytime.

eNewsletter graphic
  • Browse by Topics

  • Recent Posts

  • Have More Questions?

    Deciding to help a loved one transition to a senior living option is not an easy decision. We can help you get the clarity, answers, and support needed to lessen your worries and take the next steps.

    Click the button below to let us know how we can help you further.


  • Note: Your Privacy is very important to us and your details are kept confidential.
    You can easily unsubscribe at any time.

    Instant Access to the Program Overview Brochure

    Get more details about our signature Memory Care program to determine how well it will fit your loved one’s situation. Simply fill out the fields below to get access to the PDF.
    Reflections Memory Care Brochure Cover


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Have you decided that assisted living is the best option for your elderly parent, and now are feeling overwhelmed on how to begin your search for the right community?

    This guide will go over what you need to know before you make a decision.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Are you considering assisted living for yourself or a loved one but are hesitant about the cost? Assisted living costs, services and amenities vary greatly among the last and most expensive communities, and costs are higher in some states than others.

    This guide will answer questions you may have about the costs of assisted living and recommend resources to help you pay for it.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Talking to your aging parent about moving to an assisted living community isn’t easy.

    Often, many adult children avoid bringing it up because it can be a sensitive topic.

    This guide will provide you with helpful tips and insight on how to have a productive conversation with your parent and siblings regarding your parent’s future.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Difficult behaviors in elderly adults are very common. They may be an expression of frustration your loved one feels or a symptom of early stages of dementia or Alzheimer’s.

    This guide will provide you with skills and knowledge on how to handle difficult behaviors your aging parent may be experiencing.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Becoming a family caregiver can be a rewarding experience. It also has its challenges.

    There are many questions to answer before making the decision to take care of a loved one.

    This guide will provide answers to questions you may have on this topic.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Is your parent or loved one depressed, or just in a bad mood?

    What does medication and illness have to do with depression?

    How can you help? In this guide, you will be provided with answers to the difficult questions you may have about depression.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Has your aging parent recently lost interest in activities they used to enjoy? Have you noticed a change in their mood and behavior?

    This guide will provide you with resources and tools on how to identify depression, what are the common causes of depression, and how to promote mental health in your aging loved one.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Does your loved one need more support than what they are getting? Would they benefit from some assistance with daily activities?

    In this guide, you’ll find answers to the most common questions asked about assisted living.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Where do you start searching for assisted living or memory care communities?

    What qualities in a community should you look for? How do you know you made the right decision?


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Has your dad stopped getting together for lunches or outings with friends or visits with neighbors? Have you stopped enjoying time with your parents because you’re a caregiver?

    Choosing an assisted living community is a big decision. Learn how to find the right one for you and your loved one.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    No one ever plans to be sick or disabled, and disasters, man-made or natural, can happen at any time, anywhere.

    Yet older adults are among the most vulnerable during a crisis. That’s why it’s critical that seniors, and those who care for them, prepare for emergencies.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Moving to assisted living is a life-changing event.

    This guide provides tips and ideas on downsizing, what to pack and how to make the transition smooth for your senior parent.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    In this eBook, you’ll learn how to talk with family and friends about caregiving challenges, how to deal with a parent who is resistant to help, how to get more caregiving help from your siblings, and how to keep your job while caregiving.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Have you had to cut back your hours at work to care for your mom? Are you worried about administering medications or injections?

    Have you stopped getting together with friends, either because you don’t have the time or you’re too exhausted? Are you becoming the invisible second patient?


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    A Guide to the Most Common Family Caregiver Challenges Associated with Caring for an Aging Parent.

    You’ll learn about the true costs of being a family caregiver, common family conflicts that can occur when caring for parents, and some of the unexpected challenges of caregiving.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    In this guide, you’ll learn about the difference between Alzheimer’s and dementia, including the early symptoms of dementia; the seven stages of dementia and the symptoms that typically accompany each one; and the signs it’s time to start exploring your memory care options.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    In this guide, you’ll learn about the difference between assisted living and memory care, how health care professionals are trained in dementia care, common features of a memory care community, and questions you should ask when exploring your memory care options.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Navigating adult sibling relationships can be a challenge, but coming together for the sake of your parent is important.

    In this guide, you’ll learn about common sibling conflicts that arise when caring for parents, strategies for getting siblings on board, and where to turn to for help.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Assisted living can be a touchy subject. No matter how you approach it, your parent is likely to have objections to something.

    As you help them transition to a new stage of life, it helps to be prepared with answers to their questions and concerns.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    This checklist will help to make sure you are getting the most out of your visit to The Arbors.

    The list details what important questions to ask during your visit so you are able to make an enlightened choice and find the best assisted living community for your needs.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    If you’re unsure what Assisted Living looks like in real life, whether there is a difference with nursing homes or a desire to see how community life unfolds, then this guide is exactly what you need.

    A guide to discover the Care Team and a Typical Day in Assisted Living.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Have you decided that assisted living is the best option for your elderly parent, and now are feeling overwhelmed on how to begin your search for the right community?

    This guide will go over what you need to know before you make a decision.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Are you considering assisted living for yourself or a loved one but are hesitant about the cost? Assisted living costs, services and amenities vary greatly among the last and most expensive communities, and costs are higher in some states than others.

    This guide will answer questions you may have about the costs of assisted living and recommend resources to help you pay for it.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Talking to your aging parent about moving to an assisted living community isn’t easy.

    Often, many adult children avoid bringing it up because it can be a sensitive topic.

    This guide will provide you with helpful tips and insight on how to have a productive conversation with your parent and siblings regarding your parent’s future.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Difficult behaviors in elderly adults are very common. They may be an expression of frustration your loved one feels or a symptom of early stages of dementia or Alzheimer’s.

    This guide will provide you with skills and knowledge on how to handle difficult behaviors your aging parent may be experiencing.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Becoming a family caregiver can be a rewarding experience. It also has its challenges.

    There are many questions to answer before making the decision to take care of a loved one.

    This guide will provide answers to questions you may have on this topic.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Is your parent or loved one depressed, or just in a bad mood?

    What does medication and illness have to do with depression?

    How can you help? In this guide, you will be provided with answers to the difficult questions you may have about depression.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Has your aging parent recently lost interest in activities they used to enjoy? Have you noticed a change in their mood and behavior?

    This guide will provide you with resources and tools on how to identify depression, what are the common causes of depression, and how to promote mental health in your aging loved one.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Does your loved one need more support than what they are getting? Would they benefit from some assistance with daily activities?

    In this guide, you’ll find answers to the most common questions asked about assisted living.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Where do you start searching for assisted living or memory care communities?

    What qualities in a community should you look for? How do you know you made the right decision?


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Has your dad stopped getting together for lunches or outings with friends or visits with neighbors? Have you stopped enjoying time with your parents because you’re a caregiver?

    Choosing an assisted living community is a big decision. Learn how to find the right one for you and your loved one.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    No one ever plans to be sick or disabled, and disasters, man-made or natural, can happen at any time, anywhere.

    Yet older adults are among the most vulnerable during a crisis. That’s why it’s critical that seniors, and those who care for them, prepare for emergencies.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Moving to assisted living is a life-changing event.

    This guide provides tips and ideas on downsizing, what to pack and how to make the transition smooth for your senior parent.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    In this eBook, you’ll learn how to talk with family and friends about caregiving challenges, how to deal with a parent who is resistant to help, how to get more caregiving help from your siblings, and how to keep your job while caregiving.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Have you had to cut back your hours at work to care for your mom? Are you worried about administering medications or injections?

    Have you stopped getting together with friends, either because you don’t have the time or you’re too exhausted? Are you becoming the invisible second patient?


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    In this guide, you’ll learn about the difference between Alzheimer’s and dementia, including the early symptoms of dementia; the seven stages of dementia and the symptoms that typically accompany each one; and the signs it’s time to start exploring your memory care options.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    In this guide, you’ll learn about the difference between assisted living and memory care, how health care professionals are trained in dementia care, common features of a memory care community, and questions you should ask when exploring your memory care options.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Navigating adult sibling relationships can be a challenge, but coming together for the sake of your parent is important.

    In this guide, you’ll learn about common sibling conflicts that arise when caring for parents, strategies for getting siblings on board, and where to turn to for help.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    Assisted living can be a touchy subject. No matter how you approach it, your parent is likely to have objections to something.

    As you help them transition to a new stage of life, it helps to be prepared with answers to their questions and concerns.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    A Guide to the Most Common Family Caregiver Challenges Associated with Caring for an Aging Parent.

    You’ll learn about the true costs of being a family caregiver, common family conflicts that can occur when caring for parents, and some of the unexpected challenges of caregiving.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    This checklist will help to make sure you are getting the most out of your visit to The Arbors.

    The list details what important questions to ask during your visit so you are able to make an enlightened choice and find the best assisted living community for your needs.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Guide


    If you’re unsure what Assisted Living looks like in real life, whether there is a difference with nursing homes or a desire to see how community life unfolds, then this guide is exactly what you need.

    A guide to discover the Care Team and a Typical Day in Assisted Living.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.

    Instant Access to Free Cost Comparison guide

    You’re probably wondering how much the different senior living options compare to your current situation.
    If you do, then this guide is exactly what you need.


    NOTE: Your privacy is important to us. We’ll never share your details nor spam your inbox.